The Swiss franc extended an overnight decline against the euro, on bets that a tapering announcement
by the European Central Bank later this year will spur more selling of the haven currency.
The euro jumped as much as 0.8 percent against the franc, as purchases of the common currency by Japanese banks for their daily requirements triggered buy-stops, according to two traders
who asked not to be identified because they aren’t authorized to speak publicly. The currency pair had advanced for four straight days, touching the highest level since 2015, after Swiss
National Bank President Thomas Jordan said earlier in the week the franc is “significantly overvalued.”
“With ECB normalization, the expensiveness of CHF is no longer justified, ” said Rodrigo Catril, a currency strategist at National Australia Bank Ltd. in Sydney. “Overnight, the movement
gathered momentum and we suspect stops have been triggered in Asia today. We think EUR/CHF has room to trade toward 1.15.”
* EUR/CHF gains 0.5% to 1.13375; touched 1.13634, highest since January 2015
** Very poor liquidity in spot extended the move; EUR/CHF taking a while to fill the gap due to an absence of natural sellers: traders
** The move above overnight high was due to a combination of short covering and momentum buying: traders
** “Stop losses on USD/CHF and EUR/CHF triggered the move,” says Yuji Saito, executive director at Credit Agricole CIB’s forex department in Tokyo. “One remote reason for recent franc selling
appears to be based on speculation about Swiss funds changing allocations as the central bank is keeping an easing stance.”
Source: Bloomberg Pro Terminal
Trader - S. Fuchedzhiev
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